I have always greatly admired Jack Welch. Jack studied chemical engineering. He subsequently began working at General Electric in 1960. His career at the American company was truly extraordinary. At 37, he became vice president and at 45 he became the youngest CEO in the company’s history. During his 20 years as the company’s top executive (from 1981 to 2001), he multiplied the company’s turnover by 5 and Jack Welch was considered the best manager of the 20th century by Fortune magazine.
In the book “Winning” (don’t miss it, it’s really good), Welch himself recounts the keys to his management and his particular leadership style. He was a great defender that the main function of a manager is to manage his workers well. In fact, he advocated giving his HR directors a lot of power and placing them in the main decision-making centers of the companies. Welch used to say that “the team with the best players usually wins. For this reason, you should invest most of your time and energy in developing your people.”
In relation to people management, one of the most outstanding aspects of his management was “THE 20-70-10 METHOD”. It consisted of analyzing in detail the performance of the workers of any organization and classifying them into 3 groups.
- THE BEST ONES. Welch claimed that it used to be about 20% of the total. The best ones and the ones that got the best results. And this group must be taken good care of, he recommended paying them very well, also advised to congratulate and acknowledge them frequently, and above all, keep them motivated to be part of the project. Welch used to say that “if you pick the right people and give them a chance to spread their wings and pay them well, you hardly have to manage them.”
- THE BAD ONES. It is approximately 10% of the total. And here Welch is radical. He says these workers must be fired immediately. These dismissals are essential to improve the company’s results. And for the workers, it can also be positive because they are in a project in which they achieve poor results and possibly find a new project in which things go better for them.
- THE AVERAGE ONES. This is most of the organization, approximately 70% of the total. They are the workers who achieve average performance. And according to Welch, managing this majority well is key to improving the results of the organization. In this group, the motivation and commitment of professionals must be worked well. You must define the objectives well and train them and help them in their development to ensure that they grow within the company and can be part of the select group of 20% (the best) in the future.
Well, like almost all of Welch’s strategies, they are aggressive and probably a bit radical. Personally, I would not feel very comfortable applying them to the letter. But I do find it very interesting to understand that you can classify your workers into 3 large groups. Surely there will always be some employees who must be fired, some who achieve great results, and a vast majority who must work hard to improve their individual performance and thereby enhance the progress of the organization.
I end with a quote from Welch that I really like. “Before being a leader, success is based on your growth. When you become a leader, success is above all about helping others grow.”
